Contract Law-1 Assignment

- Arjav Khurkhuriya

• Unlawful Consideration-
Nagamma and Ors. vs. Syed Shafiulla (05.11.2020 - KARHC)

Facts- Sale of Property takes place between both the parties for the
consideration of Rs. 15,000/- on 25.11.1990 but later it came out that the was
restriction on sale of that property. Court find out that the agreement of this nature
defeats the purpose of law.

• Consensus ad idem-
Adhinarayanan vs. Babu and Ors. (27.07.2020 - MADHC)
Facts- The Plaintiff entered into the contract to purchase the property from the
defendant for the consideration of Rs. 1,53,090/- including advance payment of
Rs. 40,000 but later plaintiff found out that the defendant is not the absolute
owner of the property thereby refused to perform his part of the contract. Court
concluded that there was no Consensus ad idem between parties for transfer of
property.
• Void and Unenforceable Contract-
Ericsson Communication Ltd vs. Dy. Cit (14.12.2001 - DELHC)

Facts-LME a subsidiary of Ericsson passed an entry regarding royalty payment to

Parent Company Ericsson which is the part of the contract but the Income Tax
Department found out that the entry was passed without deducting TDS (Tax
Deducted at Source) but later in the court it was found out that the royalty
payment was not according to Industrial Policy Declared by Ministry of Industry
therefore the contract is not enforceable by law and is void and there is no
enforceable debt was created in favour of LME.

• Expressed and Implied Contract-

Taj Mahal Hotel vs. United India Insurance Co. Ltd. and Ors.
(14.11.2019 - SC)

Facts- In this case a Car was parked in the valet parking of the hotel which was
stolen from the parking. The Insurance Company and the Owner of the Car
asked the Hotel Management to pay for the theft of the car as there was
 contract between owner and the hotel to take care of the car when it was in the
parking The Hotel Company argued that there was no contract between owner
and hotel regarding parking and parking service was free of cost. Court concluded
that the complimentary services provided by the hotels are not actually free of cost
and here exists an implied contract created by virtue of the valet parking service.

• Communication of Acceptance-
Kash Ind Roller Flour Mills and Ors. vs. Union of India (UOI)
and Ors. (16.03.2007 - JKHC
Facts- In this Case the Respondent announced the tender for the processing of
wheat crop and the petitioner was the lowest tenderer for the crop but even
though the petitioner was the lowest tenderer the respondent renounced new
tender for same crop without communicating about it to the petitioner before
the commencement of the contract. Petitioner challenged the new tender on
the ground that the petitioner was declared the lowest tenderer and thereby
exist a contract between petitioner and respondent but the court concluded that
there is no contractual relationship between the parties as there was no
communication from the side of respondent about the acceptance or rejection.

• Revocation of Offer-
Madhya Pradesh State Road Transport Corporation vs. Manoj K
umar and Ors. (29.08.2016 - SC)

Facts- In this case the Corporation introduced a voluntary retirement scheme for
its employee for which had to be applied within particular period. However,
there was condition that once the application is submitted employees are not
allowed to withdraw their application but the employees applied for withdrawal
which was not accepted the corporation. Court concluded that the application
submitted by the employees for VRS is an offer which can be withdrawn by them
only during the validity period and cannot be withdrawn after the validity period even
though they are not accepted.

• Transmission of Acceptance-
Santosh Kr. Ranka vs. The Food Corporation of India
(05.01.2011 - PATNAHC)

Facts- In this case the plaintiff appointed the defendant as the transport
contractor for the term of two years also he had to deposit a security deposit to
 the plaintiff but the defendant neither started the work nor deposited the
security amount as result of this defendant was asked to pay the compensation
for the loss suffered by the plaintiff. Defendant argued that there was no
concluded contract as the acceptance was never received by the defendant
secondly, they never deposited the security amount. On the first argument of the
defendant the court concluded that there is a contract between the parties because
as soon as telegram was put into the course of transmission, it becomes the out of
the control of the plaintiff therefore acceptance is completed.

• Contract without consideration is void-

National Insurance Co. Ltd. vs. Subhadraben and Ors.
(27.11.2015 - GUJHC)

Facts- In this case a vehicular accident took place in which a one person died; the
family members of the deceased claimed for the compensation of amount Rs.
3,00,000 /- from the insurer as there was a contract of insurance between insurer
and insured but it was argued by the insurer that the cheque deposited by
claimant for the premium of the policy was dishonoured and thereby policy of
the insurance is cancelled and the intimation of the same was made to the
claimant before the accident took place. The Court concluded that contract
between insurer and the claimant is void as there was no consideration (because of
the dishonour of the cheque) so Insurance company is not liable to pay any to
compensation to the other party

• Inadequacy in consideration-
Trilok Nath vs. Khem Chand and Ors. (03 .07.2017 - DELHC)

Facts- In this case the plaintiff signed the sale deed for the property for the price
Rs. 1,00,000/- also plaintiff had given power of attorney to the defendant. The
property was furthered transferred to other parties through valid sale deed for
the higher price Rs. 3,25,000/-. The plaintiff argues that the original sale deed
should be held illegal as the deal was undervalued. However, the court held that
the mere inadequacy in consideration is not a ground to cancel the contract.
• Privity of Contract-
Vysya Bank Limited vs. A.P. State Agro Industries,
Development Corporation Limited and Ors. (14.08.2003 -
APHC)

Facts- In this case plaintiff deals in fertilizers and its dealer issued cheques in the
favour of the plaintiff. Then the plaintiff presented these cheques to its bank
then the bank of the plaintiff transferred these cheques to the bank of the
dealers(defendant) for the settlement and the bank of the dealer(defendant)
retained these cheques for a considerable period of time. The plaintiff then files
suit against the defendant claiming that the defendant retained the cheques for
longer duration for its own benefit and demanded interest for delayed payment.
The Court held that there is no privity of contract and the defendant is not entitled to
pay interest for the delay.

• Exceptions to privity of contract (third party insurance)-

National Insurance Co. Ltd. vs Smt. Asha Devi And Ors.
(18.11.2002 – ALLHC)

Facts- In this case a truck met with an accident and in the accident both driver
and mechanic lost their life, the families of the deceased asked for the
compensation however, the insurer argued that the deceased are the third party
means there is no privity of contract between them and they are not liable to pay
compensation moreover they died due to their negligence.
The court held that the insure is liable to pay compensation because there is
statutory liability to recover compensation from insurer.

• Exceptions to Consideration (Time Barred debt)-

Dinesh B. Chokshi and Ors. vs. Rahul Vasudeo Bhatt and Ors.
(19.10.2012 - BOMHC)

Facts-In this case there was a dispute between parties whether there is a
contract between parties regarding a cheque issued towards repayment towards
a written promise as the accused argued that the facts of the case do not show
that there is any time barred debt. However, the court held that the once a cheque
is drawn for the discharge of time barred debt it creates an enforceable contract
• Contract with minor is void ab initio-
Kuljinder Singh vs. Balwinder Singh (16.12.2014 - PHHC)

Facts- In this case there was a dispute between parties regarding specific
performance of sell agreement. It was claimed by the appellant that during the
during the course of the agreement the date of execution of agreement was
extended because the vendor was minor (the fact was earlier omitted by the
appellant). However, the court held that agreement between the parties is void even
if the later minor defendant had become major by void ab initio.

• Minor can be beneficiary but not promisor-

K. Balakrishnan and Ors. vs. K. Kamalam and Ors.
(18.12.2003 - SC)

Facts- In this case both parties were brother and sister and their Mother now
deceased registered a gift deed in favour of both parties when they were the
minors however years after their mother cancelled the gift deed and executed a
new will in favour of her daughter only. The Appellant argued that there as
already a gift deed therefore the cancellation of deed and will is void in the law. It
was argued in the court that the gift deed was void because the parties were
minor at the time of execution of deed. The court held that when a minor receives
a gift from his/her parents no express acceptance is required and acceptance can be
implied by mere silence of the minor thereby the gift deed is valid.

• Contract with person of unsound mind-

Angoori Devi and Ors. vs. Dalbir Singh and Ors. (21.02.2019 -
PHHC)

Facts- In this case the appellant signed the sale deed with the respondent for the
sale of a land. Dispute arises when respondent refused to transfer their property
to the appellant they argued that they had no received any consideration for the
land (which was claimed by the appellant) also the respondent is an abnormal
person who lost his mother and his father became sadhu and signature of the
respondent is obtained under the coercion as he is of unsound mind. The court
held that the contract between parties is void as one of the parties is of unsound
mind thereby appellant cannot claim his rights on the property.
• Temporary incapacity to contract-
Shiris Kumar Gupta vs. Keshav Prasad Sinha and Ors.
(21.06.2019 - CGHC)

Facts- In this case there was sale agreement signed between the parties
regarding sale of a piece of the land but the defendants refused to perform their
part of the contract as they argued that their signature in the sale deed are
obtained through fraud as they were under the influence of liquor. The court held
that agreement between parties is void as the defendants were of unsound mind
(under the influence of liquor) because A person who is usually of sound mind, but
occasionally of unsound mind, may not make a contract when he is of unsound
mind.

• Temporary capacity to contract-

Mst. Laxmi vs. Dr. Ajay Kumar and Ors. (31.08.2005 - PHHC)

Facts- In this case the appellant entered into the agreement for the sale of the
house of the defendants however the defendants refused to perform their part
of the contract as they argued that one of the owners is of unsound mind
therefore, she is unable to enter the contract. The court held that documents
regarding the mental state of the defendant are of the past time from which she
has recovered also court held that on the principle- A person who is usually of
unsound mind, but occasionally of sound mind, may make a contract when he is of
sound mind thereby contract is valid.